‘Hidden Health Tax’

Imagine what you’d do with an extra $1,000. This isn’t a theoretical number, but the extra amount American families and employers pay each year to cover the health care costs of the nation’s nearly 46 million uninsured residents. Eliminating this “hidden health tax,” as it was dubbed by Families USA, is just another reason that Congress must enact significant health care and health insurance reforms.

Families and employers pay an extra $1,017 a year in premiums for each family policy to help cover the cost of medical care for those without insurance. The tab is $368 for an individual policy, according to an analysis for Families USA, a group that advocates for health reform.

The uninsured received $116 billion worth of care from hospitals, doctors and other health providers in 2008, according to the report. The uninsured paid 37 percent of this total. Government and charities paid for 26 percent. The remainder — $42.7 billion — was wrapped into charges incurred by those with private insurance, with insurance companies passing on the higher cost through premiums paid by policyholders and employers. These costs can’t be passed on to Medicare because of federal rules and Medicaid because reimbursement rates are set by states or through managed care contracts.

The result is a hidden health tax.

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This “tax” is made worse by the fact that those without insurance generally wait longer for medical care than those with insurance. As a result, they are sicker — and require more expensive treatment — when they do go to a doctor or hospital. In 2006, 22,000 people between the ages of 25 and 64 died because of a lack of health insurance, according to an Urban Institute report.

American health care costs are among the highest in the world — and rising rapidly — yet health outcomes lag behind many other developed countries.

Congress, nudged by the Obama administration, is now in a position to change this. The most likely outcome is a system of universal coverage than retains private insurance — with minimum standards met — and offers a Medicare-type government system for all low-income Americans. The French and Dutch systems offer different models for doing this.

In addition to coverage for all Americans, a new system must emphasize wringing extra and unnecessary costs from all aspects of the industry, including hospitals, doctors’ offices and insurance companies. Universal coverage moves in this direction by eliminating the “health tax.” Additional transparency is also needed to show what medical procedures cost, not only what patients are charged for them or what insurers will cover.

It should be obvious to everyone in Congress that significant changes are needed. Now, lawmakers must find the best ways to reduce costs and improve the health of Americans.